Terex Cranes is continuing to reduce its international manufacturing capacity, with closure of its Peiner tower crane factory in Germany on course for completion before the end of the year. Tower crane manufacturing is being consolidated at the Comedil factory in Italy. A couple of Peiner models will be added to the Comedil range, although the branding is to become Terex Towers, with the Comedil name being dropped.
Terex Corporation’s chairman and chief executive officer Ron DeFeo said there were plans for further cost cutting in the North American crane business, beyond the recently announced closure of the boom truck factory in Olathe, Kansas, also set for completion before the end of the year.
Confirmation of a continued focus on cost cutting at Terex Cranes came as parent company Terex Corporation announced a net loss of $49.1m for the second quarter of 2003, on sales up 54% (thanks to acquisitions) to $1, 007m.
The Terex Cranes division had net sales for the quarter of $202.9m, which is exactly twice what they were in the second quarter of 2002, before the Demag acquisition. Operating profit fell 28% to $8.9m. The decline in profits was attributed to “competitive pricing in the market place, sales volume reduction in North America and used machine sales with very low margins”.
Excluding the impact of acquisitions (primarily Demag, but also distributor Crane & Machinery in the USA), net sales for the quarter were down more than 20% “reflecting the weak North American markets, although offset somewhat by better performance in the international markets” the company said.
For the first half off the year, crane sales were up 88% to $510.9m and operating profit was down 8% to $18.1m. The crane order book, or backlog, stood at $153m on 30 June 2003, compared with $189.5m three months earlier..
Terex Cranes president Fil Filipov said: “What we have in the crane industry are two diverse markets. The North American market is depressed and down over 30% for the first half of the year. While the international business still shows signs of life in certain areas, however, the pricing remains very competitive. Our tower crane business continues to outperform the industry, as it reported strong double-digit growth in the quarter and first six months, and Demag continues to see its markets grow on the strength of recent product introductions.
“From an operational perspective, we continue to squeeze costs out of the system by reducing our manufacturing capacity in the USA and internationally. With the previous announced relocation of our boom truck business to Waverly, Iowa and the closure of our Peiner tower crane facility in Germany, we will lower our fixed overhead and improve manufacturing efficiencies and profitability. The consolidation of these facilities will be completed in the second half of 2003.” Filipov added: “We do not expect a rebound in the end-markets and in the short term we will continue to focus on cost reductions and managing the business for cash, such as aggressively converting used equipment. This has impacted our overall margin, but we believe it is necessary to compete in today’s environment.”
